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I'm not sure from your post if you need some of the money from the 401K to live on. If so, you can avoid the 10% penalty on your withdrawal if it is from a qualified selfdirected Ira and you do it under the Form 72T. The 72T route commits you to a 5 year withdrawal at a specified amount that you pay regular income tax and State tax if applicable. Be aware also that some states charge a penalty on 401k disbursements in addition to the Feds.

Hope this helps

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